Founded in June 2012 by Cheng Wei, Didi has quickly become one of China's leading transportation companies. However, despite their leadership status, they are not untouchable. Indeed, the launch of China's communist Uber will come to play spoilsport. Find out in this article how a market leader is about to be dethroned by a communist Uber…
Strong Nation Transport, the new challenger
When a company has a monopoly on a market, it is difficult to impose itself. But in China, anything is possible… According to the Financial Times, to challenge the leader Didi, the Chinese government has opted for an aggressive strategy, launching a ride-sharing application called Strong Nation Transport. Backed by the Ministry of Transport as well as other government agencies, it is expected to target members of the Communist Party and some employees of state-owned enterprises and the government.
According to the state-run Beijing Daily, it would be mainly available to users of the Study Xi Strong Nation app. A platform launched by the Chinese Ministry of Propaganda in 2019 to force the 97 million members of the Communist Party to study the political thought of President Xi Jinping. A database that will benefit Strong Nation Transport from its launch, due to the fact that it will already have a base of over 100 million users.
In addition, the app would also allow some special services for government and state-owned enterprise employees. The Chinese government announced that Strong Nation Transport would allow booking a trip via all ride-sharing providers present in China. But also announced that the booking could be done via WeChat, Alipay, and the Chinese version of TikTok. But they don't intend to stop there, as they also plan to integrate sea, air, rail, or road transportation. The application is based on strong values with a promise to protect the privacy of its users, which was precisely what Didi was accused of…
Didi, in the target…
In June 2021, Didi goes public for 4.4 billion dollars. Once integrated, the Chinese company did not even have time to rest… Indeed, in December 2021, only a few months after their integration, the CAC (Cyberspace Administration of China) launched an investigation against Didi claiming the illegal collection of users' personal data. During the investigation, the CAC immediately ordered the suspension of new registrations and also requested the removal of the 25 apps managed by the company from the stores.
As a result, Didi was fined more than $1 billion for breaking certain laws in "despicable" ways, including those on data security. The government, however, reportedly never made public all the details of the alleged violations. This investigation has greatly affected the Chinese company, which is therefore forced to delist from the New York Stock Exchange. Once delisted, the Chinese company's shares went into over-the-counter trading in the United States, recording a loss of about 10%.
Didi has not said its last word
China now wants to revive its economy, it must be said that the three years of restrictions caused by the coronavirus have not helped. And to achieve this, the first step would be to relax the sanctions imposed on large technology companies, but obviously without losing control over their users.
It is thus after 18 months of restrictions that China has granted a reprieve and has allowed Didi to acquire new users again. Indeed, according to Digital Century, "most of Didi's applications are again available on the iPhone and Android stores of devices like Huawei or Xiaomi, since January 20."
But according to Li Chengdong, director of the Internet think tank Haitun "Didi has no reason to worry" as we said above, it is hard to dethrone the market leader. An evolution of the market in the coming months that could be interesting to follow, despite the competition such as CaoCao Mobility, T3 Chuxing, or Strong Nation Transport.